We got (almost) everything wrong: Our macro-errors, according to Nobel laureates Spence and Yunus

Two Nobel Laureates spoke at TEDx Piazza Campo de Fiori, organized in Rome by Simona Sinesi, lecturer and author, last Feb. 22. The theme of the meeting was “Macro Mistakes,” or the big mistakes in our lives, individual and communal.  

Michael (Mike) Spence, U.S. economist and university professor, was awarded the Nobel Prize in Economics in 2001 (with Joseph Stiglitz and George Akerlof, for their work on information asymmetry) reviewed the issues of our time, sparing no criticism of President Trump.

The biggest mistake of the past 20 to 30 years as a global community, according to Spence, has been to bring about globalization and technological transformation, radically changing society and the economy while at the same time creating enormous imbalances. “Governments and economists have been slow to understand and respond. We, I would say-putting me in this group of people-have been complicit in what has happened, and we see this for example in climate change or in the sharpening of inequality, and the concentration of wealth in the hands of the few,” Spence argues.

The uncertainty continues today, with the advent of Trump, whose agenda seems to be in discontinuity with the previous administration, according to the professor. Failure can open up hope, supported by technology and the strength of the younger generation. Certainly artificial intelligence can serve as a driver of growth, if put in the right hands. New generations can untangle the knots of our time. “Uncertainty around artificial intelligence is definitely the main source of all concerns, more so than the technology itself. The suspicion toward technology is cultural. Artificial intelligence must help and collaborate with the human,” Spence continued.

In a world where 10 percent of people control two-thirds of global wealth, it is really difficult to have a calm discussion about the urgencies of the international community. The solutions are not simple. Spence stresses the importance of education, for example.

It is a combination of strategies. The same thing applies to sustainability. We are not at the point of no return, according to the professor. The course of history can still be reversed, and we need all available minds and energies. Our failures can become the agenda of the next generation of leaders. Our macro-errors can teach us how to build a more just and sustainable society.

Muhammad Yunus, a Bengali economist and banker who has become famous for his pioneering work on micro-credit, has attacked, in no uncertain terms, finance and banks, that is, the entire system. Acting prime minister of Bangladesh, Yunus founded the Grameen Bank (literally, Village Bank) in 1983, an institution that offers unsecured loans to poor rural communities, with the aim of stimulating entrepreneurship and helping people out of poverty by opening credit especially to women.

For his efforts in fighting poverty, Yunus received the Nobel Peace Prize in 2006. The question here is: Who is to blame for the macro-errors of finance? Poor women, and it is not their fault, do not have access to credit because they are poor. Banks follow the rules and do not give money without collateral, so as not to compromise the interests of shareholders. Everyone is right, because “the system was wrong. We failed. We designed finance in the wrong way. Banks should be set up around people. The question has been, how do I set up a system to fit my community, and not the other way around?” asks Yunus.

To solve the problems of our time, Yunus admits, we need “to go in the opposite direction from the one we have been going in so far. We need to build an inclusive world.” Our macro-errors can help us rethink even such sacred territory as finance, as the theory and, more importantly, the practice of his model shows us. Yunus faced no small amount of resistance before achieving well-deserved fame through the Nobel Prize. But his work is not finished. There is still much to be done to give everyone access to credit and resources. “Very little is needed. We can make our world a wonderful home for everyone, one microloan at a time,” Yunus closes.

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